A survey on views of sovereign investments conducted in January reveals some apparent contradictions among how 'broad elites'* view sovereign wealth funds.

On the one hand, 75% of elites in China rate SWFs as very or somewhat trustworthy, while hedge funds and PE firms are viewed as trustworthy by only 58% and 50%, respectively.

But on further questioning, China and Indian respondents said they would be more concerned about receiving investments from SWFs than other sources, such as private equity or hedge funds. More specifically, 97% of Chinese respondents and 60% of Indian respondents indicated that they would be much more or somewhat more concerned if a SWF invested in their country compared with other forms of finance. 

This compares with the global average of 50% and is notably higher than in the West (the US 47%, UK 30% and Germany 26%). In Brazil, 54% have a similar level of concern.

Beggars can't be choosers, of course, and economies in the West are unlikely to be as fussy about where funds come from these days, given their rather pressing need for finance.

The Sovereign Brands Survey 2010 -- the inaugural report -- examined the attitude of global broad elites to sovereign wealth as a concept, the reputation of host nations and individual sovereign wealth funds (SWFs). It was conducted by communications and market research firms Hill & Knowlton and Penn Schoen Berland (PSB).

Other findings included that a country's reputation is a strong driver of the perception of its SWF; 98% of all elites interviewed feel this is somewhat important or very important. Reputation appears to affect perceptions of a fund, including its governance, transparency of financial records, performance over the previous two years and whether the SWF invests in a responsible manner.

SWFs from Norway, Singapore and Hong Kong scored highest across all these categories, and from Libya, Algeria, Botswana and Nigeria the lowest. Unsurprisingly, these rankings also reflected views about the places from which elites would most welcome SWF investment.

Temasek Holdings and Government Investment Corporation in Singapore and the Hong Kong Monetary Authority Exchange Fund are held in high regard, with 83% of respondents globally indicating they strongly or somewhat approve of these SWFs investing in their country. This figure was just five percentage points below that for Norway's SWF, which recently opened its second Asia office, in Singapore.

Meanwhile, Malaysia's strategic development companies, which were initially established as SWFs, received approval of 69%, while China's SWFs enjoy a 62% support level, on par with Russia and Mexico.

The crisis has created a good opportunity for SWFs, argues Joel Levy, chief executive for EMEA of Penn Schoen Berland. "SWFs' images are largely determined by country reputation, and despite low familiarity and concerns over transparency, broad elites see SWFs as least likely to have contributed to recent market turmoil," he says. "This puts them in a prime position to consider their positioning and reputation in contrast to other funds and asset classes."

As for concerns over the transparency of SWFs, this may have fuelled mistrust that SWF investments could be used to exert political influence and acquire strategic assets, says the report. Despite the Santiago Principles developed by the International Working Group of SWFs in September 2008, slow adoption by the industry may be deterring consideration of this asset class amongst the elites interviewed, it adds.

State funds from Russia (87%), China (84%) and Libya (74%) were considered very or somewhat likely to be motivated by political objectives and Hong Kong (59%) was in the middle of the range, with Singapore (50%) and Norway (43%) sparking less concern on this front.

PSB conducted 1,064 interviews among broad elites in seven markets (around 150 interviews in each market) between 15 January and 1 February. Interviews were conducted online in the UK, US, Brazil, Germany, China and India. Interviews in Egypt were conducted face to face.

* Broad elites are defined as influential members of society who are university educated, earning in excess of £50,000 or local market equivalent and with an active interest in national and international affairs in both politics and business. This group is commonly used as a proxy for decision-makers and their influencers.